Millionaire TradersIt Takes Time to See Different Type of MarketsOne of the reasons why trading takes a long time to master is that
market environments are not static. Markets do not simply go up
or down, but rather cycle between trending and ranging phases.
It takes a very long time to learn to understand the nuances of
each regime and to make proper adjustments to your trading style.
In fact, the markets are littered with stories of traders who made
a fortune right out of the gate because they caught a very strong
trend only to give it all back when the market started ranging. That
is why in trading there is just no substitute for experience.
Timing Is Everything, But You Will Rarely Be Right
on the First TryAt its core trading is nothing more than timing. However, timing
the entry is an extremely difficult skill to master and few short-
term traders ever get it right on the first try. That is why Chuck
Hays will often add to his positions. He even coined new terms
for his style of trading:SHADDfor short add andLADDfor long
add. This practice is a very controversial because it flies in the face
of the long-accepted market wisdom that traders should never
add to their losing position. However, like all trading rules, this
one is meant to be broken when properly executed. The key is
not to allocate all of your risk capital to the trade at once, but
rather to distribute it properly so that you achieve a good blended
price on the trade. As Chuck says, “I firmly expect to add to [the
trade] anyway. You increase your chance of success a great deal
when you understand that trying to make perfect entries and book
them...” more often means that the markets are going to “...take
your money and you’re going to lose.”